In the long run, what is the tradeoff between inflation and unemployment? Explain your answer using Phillips curve analysis
What will be an ideal response?
In the long run, there is no tradeoff between inflation and unemployment. In particular, in the long run, changes in the inflation rate have no effect on the unemployment rate. The long-run Phillips curve is vertical, thereby showing that in the long run, any inflation rate can occur but in the long run the unemployment rate will equal the natural unemployment rate.
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In the long-run equilibrium, perfectly competitive firms produce the level of output such that
A) marginal cost is minimized. B) average total cost is minimized. C) marginal cost equals the price. D) Both answers B and C are correct.
Suppose there is a firm with a fixed cost of $10 and the firm produces furniture that requires wood and labor as inputs. When does the firm's average total cost curve intersect the average variable cost curve?
a. when the price of furniture falls below $10 b. at the minimum of the average total cost curve c. at the point of greatest labor efficiency d. when the marginal cost curve intersects the average variable cost curve e. never
Managed equity funds
A) that have yielded attractive returns during the recent past can generally be counted on to yield similar returns in the future. B) are tied directly to either the Consumer Price Index or Producer Price Index. C) generally outperform indexed equity mutual funds. D) that yielded a high rate of return in the recent past often perform poorly in the future.
A leftward shift of the supply curve for oil in the United States is most likely to result from:
a. Opening of new areas for oil exploration in the United States b. An increase in the costs of exploration and drilling for oil c. A decrease in the world price of oil d. A decrease in the price which oil companies must pay for drilling licenses